I'm not sure how many of these lawsuits would end up in a jury trial, but I would be very skeptical of anything remotely based on "common sense" coming from one. I was fortunate enough to serve on a grand jury (2 days a week for 4 months) a couple of years ago. It was an eye opening experience to say the least. I know a grand jury and a civil law suit are two completely different things, but just seeing how some of my fellow jurors reacted to any case involving a gun, and their lack of knowledge of guns, gun safety, common sense gun handling, or just common sense in general, I would not want to be a participant in a trial where I could be found negligent because of someone else's bad judgement and or stupidity. You never know how people that could be on a jury will react to a case involving a gun or gun related product. Especially if they hear a sob story presented by a money hungry lawyer. Now I could hire a really good (and really expensive) lawyer to represent me, and hopefully keep me from being found liable, but that might come at a very high price. I don't sell enough holsters or make enough money to cover that type of expense.
The LLC route mentioned earlier is not a bad idea. I have been thinking pretty seriously about converting my business to a LLC. Will that protect me 100%? Probably not, but it is one more layer of protection that might be nice to have. I have liabiility insurance, which is another layer of protection. Liability insurance AND being an LLC might be a good way to go. Not 100% bullet proof, so to speak, but moreso than nothing at all. Setting up an LLC looks fairly simple and not that expensive. It shouldn't really change your taxation much, if at all. Looking at LegalZoom.com, setting on up in AZ, including the state fees, would be under $300, which doesn't seem too bad. LegalZoom charges $99 for their work, which also seems reasonable. I could spend 3 - 4 hours studying what papers to file, downloading forms, filling out forms, mailing in forms, etc, or I could make 2 - 3 holsters in that time and pay for the entire process. Seems like a no brainer to me.
As a side note, I have a friend with rental houses. He had a tenant 3 years ago that fell behind on rent. The tenant was never sent an eviction notice. The tenant decided to move out and left the place a wreck. My friend did not return his deposit. The tenant was a legal student and decided to sue my friend for the $200 deposit. My friend fought the lawsuit. The case has gone round and round in the AZ legal system. My friend has a lawyer representing him. He has spent over $15,000 on legal fees to date, and the case is not close to being over yet. All over a $200 deposit. It's crazy. He's fighting the guy just on principle now. He doesn't even care how much it costs. He has lots of money though. I don't. I couldn't afford something like that. His fight is over a $200 depost. Can you imagine what a case about a firearm and firearm related item could turn into? I would hate to think about it. Guns make some people crazy. I would hate to be on the wrong end of a lawsuit where some crazies get to decide my fate, or liability. Get all the protection you can afford. Hopefully you won't need it, but if you do, you'll be glad you have it.